Lessor’s Risk Insurance

Lessor’s Risk Insurance Information

Lessor's Risk Only Insurance (aka LRO, Lessor's Risk, or Landlord Insurance) is a type of commercial insurance designed for those who own and lease building space to individuals and businesses. It can address the building owner's lawsuit expenses if a lessee or customer of the lessee sustains bodily injury or property damage while on the owner's property and sues over it.

In other words, if you're a commercial landlord, you probably want this coverage to protect your assets and address the unique risks that come with maintaining tenants. Let's review what we mean when we talk about "lessors" and how the Lessor's Risk Only policy works.

What Is a Lessor and Why Do They Have Risk?

In a Lessor's Risk Only Insurance policy, a lessor may be any building owner who leases out at least part of their building to a tenant or lessee. A lessor can be liable if a lessee, lessee's employee, or lessee's customer suffers…

Bodily injuries while on the building owner's property.
Property damage while on the property.
For example, imagine you rent out space to a retail store in your building. While exiting the store, a customer slips on a patch of ice just outside the door and is seriously injured. Is the store liable for their medical costs or are you, the building owner?

It may depend on your contract with the store owner, but Lessor's Risk Insurance can help pay for legal expenses if the customer or the store owner sue you for damages.

Lessor's Risk Insurance can also address property damage costs, such as repairing vandalism and replacing stolen property. For instance, if the retail store in the example above is vandalized one night, the store owner may blame you for not protecting the building or providing adequate security. They may allege you're responsible for paying the repair and cleanup costs. Your LRO policy may help cover this type of claim.